The Pope’s Economics

Well, Pope Francis recently made some comments about capitalism that most observers are interpreting as anti-capitalist. And, with good reason:

“Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world,” Francis wrote in the papal statement. “This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacra­lized workings of the prevailing economic system.”

“Meanwhile,” he added, “the excluded are still waiting.”

Although Francis has previously raised concerns about the growing gap between the wealthy and the poor, the direct reference to “trickle-down” economics in the English translation of his statement is striking.

Patrick Brennan thinks it’s possible that he may have been mistranslated, but even if he was, I don’t think it was enough to change the gist of the message.

Others have offered more aggressive counter-arguments for capitalism and its benefits.

For instance, here’s economist Greg Mankiw:

First, throughout history, free-market capitalism has been a great driver of economic growth, and as my colleague Ben Friedman has written, economic growth has been a great driver of a more moral society.

Second, “trickle-down” is not a theory but a pejorative used by those on the left to describe a viewpoint they oppose. It is equivalent to those on the right referring to the “soak-the-rich” theories of the left. It is sad to see the pope using a pejorative, rather than encouraging an open-minded discussion of opposing perspectives.

Third, as far as I know, the pope did not address the tax-exempt status of the church. I would be eager to hear his views on that issue. Maybe he thinks the tax benefits the church receives do some good when they trickle down.

And here’s Shikha Dalmia from Reason.com, where they defend free market capitalism like a mama bear defends her cubs:

Pope Francis doesn’t have to thank capitalism, a system that has done far more to alleviate poverty, his pet crusade, than the institution he leads. But he should at least stop demonizing it—not least because it enables the very activity that he cherishes most: charity.

Poverty is the default condition of humanity. It is the given. What needs explaining is wealth. And the greatest engine of wealth creation is the market. By raising productivity and lowering the price of goods, markets certainly help the rich, but they help the poor more. Capitalism’s most impressive achievement, Joseph Schumpeter noted, was not providing more silk stockings for the Queen, “but in bringing them within reach of factory girls.”

Indeed, far from promoting Social Darwinism that thrives on “the survival of the fittest, where the powerful feed upon the powerless,” as the Pope claimed, capitalism does the opposite: It fosters economic competition among producers so that consumers don’t have to compete for scarce goods. In 1900, it took an average worker in the West about an hour to earn a half a gallon of milk. In 1930, half an hour. And today? Scarcely a few minutes.

If all the profits of the rich in America were handed over to workers, notes economic historian Deirdre McCloskey, the workers would only be 30 percent better off. “But in the last two centuries we’re 3,000 percent better off.”

Look, clearly the Pope is not an economist. There are a lot of things about the historical benefits of free markets (and the historical catastrophes of big-government central economic planing) that he could understand a little better.

But it’s not his job to know economics. It’s his job to be an advocate for the poor and downtrodden, and to prick our collective conscience to help them. In doing so, he’s bound to say some things that are inflammatory to cheerleaders for capitalism (of which I am the pom-pom shakingest).

I wouldn’t take economic advice from the Pope any more than I’d take spiritual advice from my accountant (not to say my accountant’s not a swell guy; but he’s not the Vicar of Christ). And I think you’ll notice he only takes his own advice in a limited way, unless, as head of state of the Vatican, he has plans to turn the whole place into a giant homeless shelter.

In addition, I’m will to cut the Pope a lot of slack because I agree with Instapundit that much of his take on capitalism can be explained by his background:

The thing you have to understand is that the Pope is from Argentina, where “capitalism” has meant “state-enabled vampire cronyism” since before he was born. Unsurprisingly, in that same time period Argentina has gone from one of the world’s richest countries to . . . something less.

Hey, lucky that could never happen here, huh?

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